Detroit bankruptcy wipes at least $13.8B from muni bond market

The Detroit bankruptcy has sucked at least $13.8B from the muni bond market, based on the S&P Municipal Bond Index - the number likely is higher, since the index doesn't track all of the $3.7T market - as headlines about distress and defaults begin to weigh on investors.

But investors could consider sewer bonds, backed by the revenues of the system and likely more safe in a bankruptcy reorganization, in contrast to the unsecured debt Detroit’s emergency manager wants to wipe out.